patience & perseverance = pot of money

South Boulder Mines


THE WORLD IS WATCHING

South Boulder Mines, a West Austra�lian company committed to maximising shareholder wealth through the acqui�sition, exploration and development of quality resource projects, knows what it means to strengthen a portfolio through project diversity. The company was originally listed on the Australian Stock Exchange in 2003 with its ground pack�age in the Duketon Greenstone Belt in Western Australia.

�Two key things have changed since the initial listing time,� Lorry Hughes, Managing Director at South Boulder says.

�I have come on board and been Manag�ing Director for coming up to two years, and we have added to our portfolio of interest potash and phosphate. Our key projects are the Eritrea potash project which is called the Colluli Potash Project, the Duketon Nickel joint venture project, and the Duketon Gold project.�

Today, South Boulder is also listed on the Ger�man Stock Exchange, has shareholders all over the world and a lot of exciting developments to report. IRJ spoke with Hughes about South Boul�der�s principle projects�Colluli, Duketon Nickel and Duketon Gold�to find out why the world is watching this exciting company.

The Colluli potash project, Eritrea

Hughes says that Colluli is potentially a world class buried evaporite potash project, which South Boulder acquired cheaply in July 2009.

�We applied for it as part of an open tender process with the government of Eritrea, so if you include travelling there, filling in application forms and time spent researching the project, our acquisition costs would be less than $30,000, which is very good,� he says.

�It�s in a known potash area. The potash in the area was originally drilled during a 10 year period from 1958-68 by American companies, and we plan to be the first company to drill in this area since 1968.� During that period ex�tensive geophysical surveys, drilling, resource and reserve calculations and underground min�ing occurred.

Colluli is situated within the Danakil Depres�sion which transgresses what is now known as the Eritrean-Ethiopian border. The Ethiopian side contains some of the world�s best known potash deposits, yet the Eritrean side has had very little exploratory drilling.

�Where our tenure is, the geological se�quence crosses the border and we�re less than 20 kilometres from a known potash deposit. We�re very excited that we�ve picked up some nice ground,� Hughes says.

�We are currently expressing plans to drill test this project for potash which are likely to start in late February.�

Hughes says that getting set up and organis�ing the logistics in Eritrea has taken South Boul�der a little time.

�For instance, I have a new local office under construction and getting fitted out with our gear to run administration from the Eritrean capital, Asmara,� he says.

�We have containers of equipment for drilling in transit too. I�ve been to the site a number of times to examine the logistical issues and poten�tial drill hole locations.�

Hughes says that there was a major period of activity between 1958 and 1968 when the known potash deposits were found and drilled, followed by a period on inactivity due to on�going outbreaks of unrest during the Eritrea war for independence. This has since ceased, and the past ten years have been very stable. Hughes says that South Boulder has entered Eritrea at a good time.

�The world has known about potash for a long time and the mother land for potash is Germany. They have some very large deposits there and have been mining continuously for 120 years on one particular series of deposits,� he continues.

�There�s a lot of expertise, some of which we are using to help with our own potash project. The other parts of the world where there�s a lot of potash experience are Canada, the largest pro�ducers in the world, and Russia.�

In February, Hughes plans to travel to Europe to speak with prospective shareholders. He high�lights Germany, Europe and Canada amongst the key places in which to do this.

�As far as Australia is concerned, it�s fairly limited. We don�t have any potash production. We import about 500,000 tonnes per annum of KCL, but investors are still quite unaware when it comes to potash,� he says.

�At least 11 per cent of our shareholders are in Canada, and we have a large portion in Europe too.�

However, South Boulder�s work in Western Australia remains as integral to the company now as it was in the very beginning. While Col�luli marks a diverse and pioneering move further afield, work continues to impress in the Duketon Greenstone Belt too.

The Duketon Gold Project

South Boulder has a large, 100 per cent-owned ground holding in excess of 1,500 square kilometres in the Duketon Greenstone Belt of Western Australia. Hughes says that it�s a pack�age which the company has been involved with for a long time, and now it looks like it is about to pay off.

�We recently had some great success with the Duketon Gold project, particularly the Termi�nator Prospect, and we�ve been looking to build on that,� he continues.

�It�s a very early stage project but it looks fantastic. These are some of the best �greenfield� numbers I have seen come out of Australia in a long time.�

These numbers include the recently complet�ed 4,216 metres (50 holes) of drilling to follow up initial results of 37 metres at 2.18 grams per tonne gold from one metre depth.

�We are designing a follow up drill pro�gramme to try and extend this mineralisation and follow up auger soil sampling programmes in other areas,� Hughes says.

�Given that we now know there is significant gold in one area we�re looking at other areas which are similar to that in the region which haven�t been tested.�

However, there is more to the Duketon Gold project than a set of encouraging standalone fig�ures, as Hughes explains that another company in the greenstone belt, Regis Resources (ASX: RRL), is currently constructing a new mill.

�They are set to be producing gold this year and they have about three million ounces of total re�source under their control. One of the key reasons why the development of this new mill in the region is exciting is that there has been no mill in this area for a long time, even though gold has been known about here for some time,� Hughes says.

�The previous exploration target for historic explorers has been to find something large enough to sustain a standalone operation. Now with a new mill located only 30 kilometres directly from our new discovery, there�s potential in case this deposit is found to be too small to warrant a standalone operation.�

Hughes says that South Boulder may be able to truck ore to this mill, which makes the belt a much more commercial location. Equally exciting is the potential for outsider interest.

�We have a large player here in the belt with three million ounces. Anything we find is of inter�est to them and may potentially make our compa�ny a takeover target. If we find something that�s very good they will probably want to acquire us,� Hughes explains.

Persisting with the Duketon Gold ground pack�age has certainly left South Boulder well-placed with plenty of options for future development.

The Duketon Nickel Project

The third flagship project in the South Boulder portfolio, the Duketon Nickel project, commenced in 2004 when the company entered a joint ven�ture agreement with Independence Group (ASX: IGO). This JV ground initially comprised all South Boulder�s tenements in the Duketon greenstone belt, however, now only selected tenements are included. Essentially a lot of ground up at Duke�ton is prospective for gold and nickel.

�Independence can earn 70 per cent of the nickel project by definition of a Bankable Feasibility Study, and just this morning they released some new results,� Hughes says.

�They (IGO) can earn 70 per cent of the nickel and we own 100 per cent of the gold. They have done a lot of work in the last 12 months and have come up with some outstanding success.�

IGO has delineated a very early stage zone where there is 350 metres of strike with plus two per cent nickel. Hughes says that this was only partially drilled in the last programme and turned up grades of up to five per cent nickel.

�Essentially what we have is some massive sulphide, and the history of nickel in Western Australia. Where you find a massive sulphide, you don�t have to look too far to find more,� he says.

�We�re very excited and so is our joint venture partner. The next drill programme will start in the last week of January, and they are getting geared up for that. They have some exciting electromag�netic targets directly beneath the previous drilling and the project is at a stage where everyone is watching this next drill programme.�

A year of much research and development, a sixth sense for holding the Duketon Gold ground package, and the foresight to enter Eritrea com�bines to create a strong and potentially extremely rewarding portfolio for South Boulder.

�We�re very hopeful that investors will be heavily rewarded with this one,� Hughes says.

If the successful and encouraging results of the past 12 months are anything to go by, South Boulder shareholders may be in for fan�tastic results.